I read online that 'shall' is still used for technical specifications and instructions, where it means 'must' i.e. it is used to describe an instruction that must be followed or a rule. It does not apply in your example because you are not giving instructions or writing a specification, you are explaining what will happen. I would write it like this: When the pokayoke (fool proofing device) detects a defective part, the machine will stop. The lamp on the control panel will turn on and a buzzer will sound. I have rearranged the sentence because you need to say 'ON the control panel, and without the rearrangement it would be 'turn on on the control panel', which is not good English. By the way, just as an aside nowadays native English speakers hardly ever use 'shall', we use 'will' instead in nearly all cases with a few specific exceptions. 'Shall' sounds really strange and old fashioned even when it is used correctly.

When pokayoke (fool proof device) detects a defective part, the machine will stop, a light will turn on in the control panel and a buzzer will sound. 'Shall' does not make the sentence more polite.

Erika's correction is valid for general writing. In some cases, the word "shall" is used in contractual and/or technical documentation to denote a specific requirement. So in your example, you could fault somebody for applying grease more than 3 times. Using "should" makes the line read more like a general recommendation, where it's not advised to apply grease more than 3 times.